By: Chuck Frey
The key element in developing business strategy is to define your intent. A company’s intent could be to lead in some markets, and be a follower in another. A company can be a niche player, or a low cost leader, or the high value leader. Whatever the selection, it should be based on the desire to win and to determine what can be versus what is.
It should be safe to say that all business leaders are positive that they have a strategy. Many times, however, what passes for a strategy is actually a financial plan, or perhaps tactical marketing plans.
These plans are quite important in operating a business, but they are tools for measuring how well a company is selling products that its chosen customers desire, and how efficiently the company can produce its offerings. Profitability is a measurement, not a strategy. Promotions help sell what you have today, but they don’t tell you what to sell next.
The development of a business strategy must be focused on how to establish sustainable competitive advantage so a company can deliver long-term, superior performance. Strategic thinking is an iterative process to create a vision for the future and a clear, concise blueprint for realizing that vision. This should be the major focus of the leadership team and should be done continually, not at a once-a-year retreat.
The key element in developing business strategy is to define your intent. A company’s intent could be to lead in some markets, and be a follower in another. A company can be a niche player, or a low cost leader, or the high value leader. Whatever the selection, it should be based on the desire to win and to determine what can be versus what is.
Intent also focuses on key competitive targets and provides a framework for which competencies to develop, the types of resources needed, or what segments to pursue.
Finally, intent is driven by the timeframe in which the company will achieve its vision. A structured innovation process can help inform the strategic thinking process by identifying customer desires, uncovering opportunity areas and adjacencies, and creating strategic alternatives. These alternatives must be assessed by the senior leadership for investment potential.
Selecting the best alternative from multiple options is not an easy task, and it is what separates highly successful companies from companies that are less successful. One of the hardest questions an executive faces is when to say “no.” It is easy for people to adopt “the squirrel syndrome” – i.e., chasing bright, shiny objects. Chasing the next new thing without putting it in context of supporting the company’s strategic intent is the fast route to bankruptcy. Too many products, unfocused services, and trying to be all things to all people creates chaos within any organization.
While there are many different tools and approaches, the fact is that each company’s strategy must be unique, it must state what sets your company apart from the others, and why your targeted customers chose your offerings over competitive offerings. The key areas to assess in building a business strategy include developing a deep understanding of the following elements:
- Customer drivers (emotional, physical, social, cultural and cognitive needs)
- Company capabilities (what competencies allow your firm to stand apart and build a unique set of customer value)
- Channel drivers (how you can distribute your offerings, business models, and leverage partnership strengths)
- Competitive drivers (trends affecting your markets, new technology, new entrants, mergers, and how other firms attract customers)
By getting closer to your customers every day, understanding more about them, and providing them what they want (not just what you produce) while formally assessing this information on a regular basis is the platform for developing a sustainable, long-term competitive advantage. That is the ultimate goal of strategy.